Boeing May Have Benefited From Alleged Change In NASA Contract Scoring

For now, Russian rockets and capsules are the only way for NASA astronauts to reach the international space station.
NASA/European Pressphoto Agency

By

Andy Pasztor

Dec. 22, 2014 6:18 pm ET

A legal battle over
Boeing Co.
’s $4.2 billion contract to transport U.S. astronauts into orbit may hinge on whether the company benefited from an alleged last-minute change by NASA in its criteria for picking winning bids.

Sierra Nevada Corp., which lost the competition to Boeing in the fall, subsequently filed a protest with the U.S. Government Accountability Office, though all the legal wrangling has played out under a tight seal of confidentiality. But in recent weeks, details have emerged that some of the arguments at the heart of the proceeding revolve around Sierra Nevada’s claims that a high-ranking agency official opted to rank Boeing’s proposal higher than a previous panel of agency procurement experts.

According to people familiar with the details, Sierra Nevada has alleged that Boeing won unfairly, because the choice was partly based on agency projections that the Chicago-based aerospace giant was more likely than its rival to complete the work on time. Sierra Nevada’s filings, however, contend that the National Aeronautics and Space Administration’s formal bidding criteria put a premium on price combined with technical issues, without indicating that scheduling considerations would be major factors in ranking rival proposals, one of these people said.

Sierra Nevada’s bid was about $900 million lower than the one Boeing submitted, but NASA’s final decision memo noted that Sierra Nevada’s plans entailed “considerably more schedule risk.”

So far, Boeing hasn’t suffered from the legal maneuvering. It has received about $300 million in progress payments from NASA since Sierra, based in Sparks, Nev., filed its protest in September. In response, NASA persuaded the U.S. Court of Federal Claims to permit Boeing and another contractor to continue work while the protest is pending, on the grounds that maintaining project schedule is of paramount importance.

Spokeswomen for Boeing and Sierra Nevada have consistently declined to comment on specific legal arguments in the case. Sierra Nevada previously said NASA’s decision “would result in a substantial increased cost to the public despite near equivalent technical and past performance scores.”

Earlier this month,
John Elbon,
a senior Boeing space official, said it is “incredibly important to start right away” on the new contract to sustain momentum.

On Monday, a NASA spokeswoman declined to comment. The GAO’s decision, expected the first week of January, could uphold the contract or call on NASA to take remedial action, which could range from rebidding the work to less dramatic steps.

The astronaut missions are slated to start in 2017. Until then, Russian rockets and capsules are the only way for NASA astronauts to reach the international space station.

Closely held Space Exploration Technologies Corp. also was picked to develop, test and operate a separate fleet of so-called commercial space taxis serving the orbiting scientific laboratory, though its $2.6 billion award hasn’t been embroiled in the courtroom wrangling.

By contrast, Sierra Nevada has challenged Boeing’s award on various grounds. One of the main assertions, according to one person familiar with the details, is that
William Gerstenmaier,
the agency’s top human exploration official and the one who made the final decision, overstepped his authority by unilaterally changing the scoring criteria.

The decision memo signed by Mr. Gerstenmaier—which hasn’t been released by NASA—appears to provide some ammunition for Sierra Nevada’s arguments. The memo notes that the original request for proposals listed mission suitability, price and past performance as the primary considerations. But in his summary explaining why he picked Boeing, Mr. Gerstenmaier, in part, emphasized schedule. He said he saw “less schedule risk based on (Boeing’s) more complete and detailed recognition of the work to be done.”

All three companies are competing for the next phase of separate, multibillion-dollar commercial contracts to ferry cargo to and from the space station. NASA plans to award those contracts in the spring.